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Parmalat Trial Starts in Milan

A trial stemming from the near collapse of Italian dairy group Parmalat, the European Union's biggest financial scandal, opens Wednesday with the company's founder Calisto Tanzi in the dock.

Parmalat's leaders were arrested almost two years ago

Tanzi turned his father's grocery shop into one of the largest dairy companies in world with 36,000 employees in 30 countries. He was considered one of Italy's economic wonders of the 1970s and is accused of nearly driving the Parmalat empire into the ground.

Former Parmalat President Calisto Tanzi

Almost two years after a 14-billion-euro ($17-billion) hole was found in the company's accounts -- eight times more than reported in company record, the 66-year-old is to be tried along with 15 other people, including several company administrators. He faces charges of false accounting and share price manipulation and could spend up to five years in jail if convicted.

Auditors also implicated

Two auditing companies -- Grant Thornton, and Deloitte and Touche -- and the Italian subsidiary of Bank of America have also been targeted by prosecutors and face the same charges.

In his testimony, Tanzi, who has not yet personally commented on the case, is expected to place the blame on the banks for covering up the scandal.

The trial is to decide how much responsibility lay with Tanzi and how much with the others in reports of false information to financial markets that swallowed the savings of about 135,000 investors in Italy.

"We are looking at the swindle of the century," Francesco Greco, assistant prosecutor charged with the case, told the AFP news agency.

The trial could last several months

The affair's two main features were financial engineering, which gave the fictitious appearance that the group had offshore assets that did not exist, and a long series of bond issues, popular as low-risk investments.

The trial could last several months owing to the large number of witnesses that both sides intend to call, lawyers said.

Second case in Parma under investigation

Tanzi's right-hand man Fausto Tonna and 10 others have already been sentenced to prison terms ranging from 10 months to two and a half years following negotiations with prosecutors.

A second trial in Parma, where Parmalat has its headquarters, with more serious charges carrying a maximum sentence of 20 years for false accounting and criminal association are also being looked at, though prosecutors have not said when they would bring the case to court.